What to Watch
2 22
10 Indicators for Occupiers & Investors
Rising vaccination and booster rates, combined with a more transmissible and less severe strain, may allow the pandemic to shift toward endemic in 2022, mitigating economic disruption.
of the WORLD population is fully vaccinated
5 .4%
THE PANDEMIC
1
IS FULLY OR AT LEAST PARTIALLY VACCINATED
What to WATCH
X
Source: Our World Data as of January 18
6 .1%
What to
WATCH
Supply chain pressures will ease as the pandemic recedes. Look for ports to utilize slower post-holiday months to catch up on backlogs. If ports can’t reduce backlogs during this period, port bottlenecks are likely to extend into 2022.
GLOBAL SUPPLY CHAIN
2
of global goods travel through Asia Pacific. This region of the world has been quicker to shut down factories and ports due to COVID-19 outbreaks.
APPROXIMATELY
6 %
Inflation expectations. Although current CPI inflation is running hot, current high rates are not expected to persist into the medium-term, limiting pressure on long-term rates. If inflation expectations remain low, then odds are good that long-term interest rates will also remain low throughout 2022.
INFLATION INFLECTION
3
Analysis of historical commercial real estate (CRE) returns shows a strong positive trend as CRE RETURNS tend to rise more than 1:1 with increases in inflation in both private and public markets.
1 1
Consumer Confidence. Much of the strong economic growth being projected assumes the consumer is ready to unleash pent-up demand that has been accumulating throughout the pandemic. As confidence grows, look for global real GDP to grow in the 4-5% range in 2022.
GDP: CRE BENEFITS FROM STRONGER GROWTH
4
EVERY 10 BPS OF REAL GDP GROWTH GENERATES Property Demand
+5
+45
OFFICE*
INDUSTRIAL**
MSF
*Global **U.S. used as a proxy for world for industrial.
Industrial demand boom to continue and construction deliveries to surge in 2022 bringing more balance to the marketplace.
In London, the current level of availability fell by in just 18 months (3/2020 to 9/2021)
INDUSTRIAL SUPPLY PLAYING CATCH UP TO DEMAND
5
<2%
VACANCY RATES IN LOS ANGELES INLAND EMPIRE SAVANNAH NEW JERSEY
33%
Home prices and rents exist in equilibrium. Watch for home price growth to slow down generally (it’s already begun) while rent growth persists and accelerates in lagging markets.
MULTIFAMILY HOUSEHOLD FORMATION
6
U.S. HH formation to surge
More jobs
More HOUSEHOLDS
More DEMAND FOR MULTIFAMILY UNITS
=
4 %
above historical average in 2022 and 2023
INVESTOR DIVERSIFICATION
7
Investors should be on the watch for a partial normalization of market activity, becoming more apparent in the second half of 2022 and accelerating into 2023.
continue to hit record lows
of total global sales volume – up 30% from 10 years ago
52%
9
Multifamily and industrial logistics now account for
Yields
'Stranded Assets' —we will start to see buildings that do not meet ESG requirements of investors or occupiers. The cost to retrofit some buildings will be too high to deliver value.
SUSTAINABILITY SHIFTING TO FOREFRONT
8
of global CO emissions come from the built environment
3 %
FROM OPERATIONAL ASPECTS
28%
from embodied carbon created during the build
11%
Occupiers to lock in favorable terms for the long-term before office fundamentals recover—i.e., rental rates increase, and concessions decrease.
Confidence In Office Market
In 2021 we observed that businesses began signing longer-term leases again – a sign that confidence in office was growing.
In 2021, U.S. leases signed with a term of 5+ years accounted for
2/3
OF CLASS A DEAL ACTIVITY
made up 32% of leasing activity IN Q4 2021
1 + YRS
U.S. Leases signed for
Although the initial impact of stimulus is behind us, households accumulated savings during the last two years to further support retail growth in 2022. Stronger wage growth and a favorable job market will bolster a broader recovery across retail property markets as the travel, dining and entertainment sectors spring back to life.
RETAIL REBOUND
10
excess savings globally
$5.4T
OF GLOBAL GDP
6. %
